Jobs, HAMP, Beige Book
- Mar 03, 2011
March 3, 2011
By Dees Stribling, Contributing Editor
It’s that time of the month again: first ADP reports on employment, then the U.S. Department of Labor makes a report two days later. For what it’s worth, ADP said that private companies added 217,000 payroll positions in February, more than expected. If so, that might drive the unemployment rate down a little, but ADP and the government estimates have been at odds before.
By contrast, Challenger, Gray & Christmas Inc. said on Wednesday that planned layoffs spiked upward in February to more than 50,700, which is 32 percent higher than January and 20 percent higher than during the same month in 2010. It was, in fact, the highest number in 11 months, but Challenger also said it’s too soon to know whether the increase is an unfortunate trend or an unfortunate fluke.
Challenger also warned about the impact of higher gas prices, if they stay high for any length of time. “At the very least, rising energy costs could force employers to postpone hiring plans,” Challenger CEO John Challenger said in a statement. “At worse, increased costs could kill the fragile recovery and spur another round of layoffs.”
HAMP: Live or Die?
As is, the Home Affordable Modification Program doesn’t have many defenders these days, except perhaps for the government department that oversees it (Treasury), but that doesn’t mean that there’s much consensus about what to do about the program to encourage mortgage modifications. Some want it changed, but plenty of other people, many of them in Congress, want the program to go away forever.
At a hearing before the House Financial Services’ Insurance, Housing and Community Opportunity Subcommittee, Neil Barofsky, outgoing TARP overseer who has had plenty of pointed barbs for the program in the past, called it “somewhat shameful” in its ineffectiveness–and in sometimes doing more harm that good. “Failed trial modifications often leave borrowers with more principal outstanding on their loans, less home equity, depleted savings and worse credit scores,” he said.
He did not, however, advocate abolishing the program, but fixing it, which is generally the Democratic position on the matter. The Republican position, generally speaking, is to put it down like a horse with a broken leg.
Beige Sees Modest Growth
The Beige Book–“Summary of Commentary on Current Economic Conditions by Federal Reserve District,” to give its seldom-used title–is back after its February hiatus, reporting that “overall economic activity continued to expand at a modest to moderate pace in January and early February.” The drivers in growth have been the uptick in consumer spending and manufacturing. Overall, however, “modest” and “moderate” were used fairly often by the Beige Book this time around to describe current economic growth.
As for real estate, the Fed noted that “some Districts reported a slight increase in the level of residential real estate activity, although all Districts maintained that the overall level of home sales and construction remained low. Several Districts indicated improvements in commercial real estate sales.”
Wall Street bounced along like a seismograph needle in an earthquake on Wednesday, but ended up almost where it started. The Dow Jones Industrial Average gained a meager 8.78 points, or 0.07 percent, while the S&P 500 gained 0.16 percent, and the Nasdaq–perhaps cheered that Steve Jobs made a public appearance–gained 0.39 percent.